Tourism industry will not see V-shaped rebound: central bank

Passengers on a New York City Subway train.
Passengers on a New York City Subway train.

TAIPEI (CNA) — As the COVID-19 coronavirus disease pandemic continues to strike hard around the world, local tourism-related businesses are unlikely to see a V-shaped rebound any time soon, Taiwan’s central bank said Friday.

Despite the fact that the effects of delayed purchases after the pandemic can be expected, the impact on the global and domestic economies of COVID-19 is far greater than that of the severe acute respiratory syndrome (SARS) epidemic of 2003, the bank said in a report.

Tourism-related sectors, in particular, will be hardest-hit, with widespread travel restrictions and bans on mass gatherings imposed by governments across the world, it said.

“It is difficult to say that there will be a V-shaped rebound at the moment, as all depends on the development of the pandemic,” it said.

Taking the SARS that broke out in late 2002 as an example, the bank said the domestic economy rapidly lost momentum in the second quarter of 2003 after the disease took its toll on global activity.

Over the three-month period, travel volume on international flights to and from Taiwan plunged by 69.5 percent and Taiwan’s economic growth for 2003 contracted by 1.15 percent as a result of the knock-on effects of SARS, the bank said.

According to the report, passenger load factors on routes between Taiwan and China and those between Taiwan and Hong Kong and Taiwan and Macau in February plummeted by 90.9 percent and 94.4 percent, respectively, compared with their December levels.

At the same time, taxi drivers saw a 30 percent drop in customer numbers, while tour bus operators also experienced a 17.2 percent decline in daily operations from January, the report said.

In a similar vein, domestic economic expansion is likely to shrink this year, which the bank said had pushed it to cut its forecast for Taiwan’s growth in gross domestic product (GDP) for 2020 from 2.57 percent made in March to 1.92 percent.

In terms of related businesses, the restaurant/beverage sector typically enjoys the highest GDP ratio yielded by the tourism industry, while tourism agencies, hotels, car rental and air transportation companies also glean a noticeable portion of their incomes from it, it said.